Jan 7, 2017 HerbMeiberger
by Patrick Monette-Shaw
An election underway may cost City taxpayers — who aren’t eligible to vote — dearly. Only City employees and retirees can vote in this San Francisco Employees’ Retirement System (SFERS) election. It’s important because SFERS sets City contribution rates funded by taxpayer dollars.
The Police Officers Association (POA), Management Executives Association (MEA), and the International Federation of Professional and Technical Engineers (IFPTE) Local 21 are lying about facts in a bizarre attempt to unseat incumbent Commissioner Herb Meiberger, Chartered Financial Analyst, and install retired Police Captain Al Casciato to bequeath all three elected seats to “Public Safety” (police officers and firefighters), and gain a four-vote majority on the seven-member Board. Meiberger’s qualified; he’s an investment professional. Casciato isn’t; he’s a retired cop.
They’re lying to frighten voters into voting for Casciato to invest more of SFERS’ $21 billion portfolio in high-risk hedge funds, hoping to chase excess “alpha” (investment returns greater than projected).
No other California pension fund has all elected seats controlled exclusively by public safety. More than 65,000 San Francisco “Miscellaneous” members — doctors, bus drivers, secretaries, and everyone else — would lose representation on SFERS’ board! Casciato was asked to withdraw from this election to preserve Miscellaneous members’ representation. He refused.
On Feb. 11, 2015, SFERS’ Chief Investment Officer, Bill Coaker — The City’s highest-paid employee in the fiscal year ending June 30, 2016 earning a $512,486 salary — recommended investing up to $3 billion (15 percent) of the fund’s then $20 billion portfolio in hedge funds. SFERS’ board balked, and a majority restricted the investment to $1 billion (5 percent). Coaker preferred investing 25 percent — $5 billion — in hedge funds!
Coaker dragged his feet, only last October issuing the initial $250 million hedge fund investment. During SFERS’ November 2016 meeting, Meiberger asked for names of external hedge fund managers, their funded amounts and management fees. He was told names, amounts and fees are “privileged” and won’t be disclosed to plan members or taxpayers. The hedge fund details are SFERS’ only investment undisclosed to the public and plan participants. The remaining $750 million hedge fund investments will involve the same secrecy.
The POA, MEA and IFPTE remain annoyed over restricted hedge fund investments. They’re desperately lying to unseat Meiberger to increase hedge fund investments. If gambling on increased alpha fails and the fund loses millions of dollars, it will haunt taxpayers with increased General Fund employer-share contributions to prop up investment losses.
Casciato’s campaign teeters on lies. The biggest lie his surrogates regurgitate is the pension fund lost $1.5 billion last year. Nonsense. On Dec. 14, 2016. Coaker, SFERS’ Director Jay Huish, and Allan Martin from SFERS’ general consultant, NEPC, informed the board SFERS had a $1.89 billion investment gain, offset by increased pension benefit payouts.
Martin noted SFERS is the third-best performing fund among 50 public pension plans with assets over $1 billion. After Casciato resigned from SFERS’ board in June 2012, SFERS’ fully-funded status increased 7.3 percent, to 89.9 percent. During Casciato’s last five years on the board, the fund’s valuation declined 9.4 percent; since he resigned, it increased 37 percent to $21 billion.
Casciato has bragged he’s raised a staggering $200,000 for his election. Forget seeing campaign disclosure reports of Casciato’s donations or expenditures, because elected SFERS candidates aren’t required to file campaign disclosure statements with the Ethics Commission.
Casciato surrogates lied about Meiberger causing $130 million in “lost revenue.” Given only four days to evaluate a risky investment in unlisted Chinese “A Shares,” commissioners Meiberger, Malia Cohen and Leona Bridges initially voted against the investment, concerned about “beneficial ownership” of the investment and incomplete “due diligence” by SFERS staff. The investment was eventually approved. SFERS commissioners are required to perform due diligence as trustees and fiduciaries of the fund. That’s their job!
SFERS lost $70 million in a failed foreign currency hedge fund investment Casciato supported and another $179.2 million in other losses. We don’t need additional hedge fund losses.
Encourage your friends and family eligible to vote in this election to vote for “watchdog” Meiberger. Otherwise, watch your wallets.
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